Mice bearing a tumor necrosis factor (TNF) alpha transgene controlled by an insulin promoter developed an increasingly severe lymphocytic insulitis, apparently resulting from the induction of endothelial changes with features similar to those observed in other places of intense lymphocytic traffic. This was accompanied by dissociation of the endocrine tissue (without marked decrease in its total mass), islet fibrosis, and the development of intraislet ductules containing, by places, beta cells in their walls, suggesting a regenerative capacity. Islet disorganization and fibrosis did not result from lymphocytic infiltration, since they were also observed in SCID mice bearing the transgene. Diabetes never developed, even though a number of potentially inducing conditions were used, including the prolonged perfusion of interferon gamma and the permanent expression of a nontolerogenic viral protein on beta cells (obtained by using mice bearing two transgenes). It is concluded that (a) a slow process of TNF release in pancreatic islets induces insulitis, and may be instrumental in the insulitis resulting from local cell-mediated immune reactions, but (b) that insulitis per se is not diabetogenic, lymphocyte stimulation by cells other than beta cells being necessary to trigger extensive beta cell damage. This provides an explanation for the discrepancy between the occurrence of insulitis and that of clinical disease in autoimmune diabetes.